Insurers failing to tackle investments under ClimateWise Principles

Some of the world’s biggest insurance companies that have signed up to the ClimateWise Principles, an industry commitment against the threat of climate change, have yet to make much headway in adapting their investments to the risks of global warming. In its first annual review of adherence to the principles, ClimateWise, which was launched in 2007 under the patronage of HRH Prince Charles, said that that fewer than half of its 41 members had reported on how they assessed its impacts on company performance and shareholder value for the assets they hold. The insurance industry as a whole is one of the biggest constituents of global stock markets and is believed to own about a quarter of the equity traded. In addition, the report said insurance companies needed to do more to make their own pension fund trustees aware of the risks: “Climate change should be viewed as a fundamental driver of company performance and shareholder value, and fund trustees should ensure that employees’ pensions are protected by a comprehensive investment strategy.” ClimateWise signatories include insurance giants Allianz, AXA, AIG and Swiss Re. In the UK, the group covers 60% of the general insurance sector and almost 50% of the life insurance sector.
The assessment for ClimateWise, which was producedby Forum For The Future, the UK sustainable development organisation, said some members did not appear to view climate change as a material risk to their investments. It said: “This may be because of the size and nature of funds they have invested, because they have not fully explored the links between climate change and shareholder value, or because they view climate change as a long-term issue.” However, the report issued a challenge suggesting that signatories were not paying enough attention to the investment theme: “Members need to look more deeply at the scale and nature of climate risk to their investments and consider whether they should challenge any of their own assumptions. Members who feel this is not relevant to their business should demonstrate that they have comprehensively assessed the potential areas of risk.” The report said insurers had been much more proactive in encouraging customer awareness on climate change with half having designed products and services to help clients reduce carbon emissions. It said the majority of members were now also providing insurance for products and services relating to clean technology, a major boost to the growth of the sector. Nonetheless, it said none had yet explored themes such as how climate change-related liability insurance might influence corporate behaviour.
Link to full report